1202012 Informal Interpretation

Michael Verne

– Agree.





Thursday, February 23, 2012 8:40 PM


Verne, B. Michael




Request for confirmation of our view


Here is the fact patternI was hoping to discuss with you. We have a client, Mr. R, who currentlycontrols Company A. Mr. R's has achieved control through a combination of holdingCommon Shares (shares representing approximately 40% of the voting power) andbeing granted irrevocable proxies by third parties (such irrevocable proxiesrepresenting approximately 25% of the voting power). Mr. R will now beacquiring additional voting securities of Company A by way of an exercise ofstock options that have been previously granted to him. Mr. R does not hold anynon-voting convertible securities of Company A.

I am aware of theexemptions found in Section 7 A(c)(3) of the Clayton Act, which exemptsacquisitions of voting securities of issuers when the acquiring person alreadyowned at least 50% of the shares prior to the acquisition. I am also aware ofRule 802.30, which exempts an acquisition of voting securities when the acquiringand acquired persons are the same person. However these exemptions normally donot allow a control person to rely upon these exemptions when control isobtained through a combination of holding securities and having the contractualright to designate board members. We are aware that Informal Interpretation No.48 contained in the ABA's Premerger Notification Manual (4th Edition) (whichcites Informal Interpretation 0012005 dated December 8, 2000) supports thepremise that reporting requirements are determined by the amount of votingstock that will be held by that person and not by whether that person has beengiven the right to vote the stock as a result of an irrevocable proxy or anagreement with others. Could you confirm that is still the current position ofthe PNO ?

With respect to anacquisition of voting securities of Company A by Mr. R, a filing would berequired under the HSR Act with Mr. R reporting as both an acquiring andacquired party, assuming all applicable thresholds were met. Would you let meknow if you agree with our analysis?

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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